Interesting partnership announced today—private equity firm KKR joining with Environmental Defense Fund to come up with tools for measuring the environmental footprint of KKR’s portfolio companies. It’s the topic of today’s Sustainability column.
Here’s how it begins:
Private equity firms are renowned — and occasionally denounced — for squeezing costs out of companies they buy. Their investors say buyout funds help the economy become more efficient, and build shareholder value. Their critics allege that they do so by exploiting workers, avoiding taxes and polluting the planet.
We won’t try to settle that argument here, but it provides a useful context for Thursday’s announcement of a partnership between Kohlberg Kravis Roberts, one of the world’s leading buyout firms, and the Environmental Defense Fund, a nonprofit environmental group. Their “green portfolio” partnership — the first between a big private equity fund and an environmental group — is intended to measure and improve the environmental performance of KKR’s U.S. companies
This news is, all at once, significant, surprising and predictable.
You can read the rest here.
Marc:
Here we go again confusing eco-efficiency with sustainability, as if one is the same as the other. KKR’s newfound respect for eco-efficiency tells us nothing about the sustainability of the comapnies they invest in, much less their own operations. And EDF’s involvement, as if things were otherwise, is meaningless.
The confusion you introduce, or at least amplify, between ecological and social sustainability is also not particularly helpful. After all, what does “mistreating workers” have to do with despoiling the environment? I agree both are important, but casting the whole issue in terms of “eco-efficiency”, as opposed to responsibility or sustainability, does nothing but foster confusion. Does any of this matter to you, or is it just about selling magazines?
Worse yet, I’m afraid, is the effect your report has on encouraging people to believe that improvements in eco-efficiency will solve our sustainability problems. They will not. A company’s improvments in eco-efficiency will not necessarily make it sustainable (they arguably never have). Nor will it absolve its owners or investors of their culpability for the damaging effects of their operations. Why the EDF would sign up for this charade as if things were otherwise is beyond me.
Regards,
Mark
KKR and many of the other private equity firms are renowned for their “greed is good†philosophy and will stop at nothing to squeeze profits out of the companies they acquire. All this is usually in the name of more â€efficiency†but it is really just about the bottom line. While addressing the environmental issues within the KKR portfolio is good for the sustainable movement, this says nothing about some of the downsizing practices they implement in laying of thousands of employees and giving them less they adequate severance packages. This is something I know first hand with my father’s company which was once a thriving fortune 500 company until KKR came along. I emphasize the word once!!
No matter how genuine KKR’s efforts are to perform better on environmental issues, I believe notable outcomes will occur out of their partnership with the Environmental Defense Fund. Especially, if the NGO stands strong on what it believes in, which is seems they want to since they are not taking money from KKR. If anything by making the tools the NGO uses to measure environmental performance public not only will it make KKR more transparent other companies may see a need to become more environmental friendly.
Lets be honest no company is perfect and KKR is far from it, but they are making progress on the environmental front and it is something positive to look forward to.
[...] Washington Consensus May 8, 2008 Posted by davidzweig in Uncategorized. trackback Academy Fellow Hazel Henderson has frequently decried the export strategies that underpin theso-called Washington Consensus. Also at the Milken conference (cited in the post below), Marc Gunther attached some fascinating numbers to the situation. The declines Hausmann mentions are major contributors to the geopolitical problems that are now washing up on the shores of developed nations, the US chiefly among them Richardo Hausmann, an international development expert at the Kennedy School at Harvard, noted that all of the world’s 24 rich industrial countries had their peak per capita income since 2000; they are, despite fits and starts, growing their economies. But only 58% of the 112 developing countries have had their peak per capita income in the 21st century. Others peaked in the 1960s, 1970s or early 1980s, often because they relied on an export product that fell out of favor. “Most growth collapses coincide with export collapses,†he said. Countries need to aim for more “sophisticated†export packages to insure against commodity price fluctuations. [...]